Bharat Financial Inclusion

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Bharat Financial Inclusion Ltd (formerly SKS Microfinance Ltd)
Industry Finance
Founded 1998
Headquarters Hyderabad, India
Area served
Key people
Vikram Akula - Founder
Number of employees
9,698 (2015)[1]

Bharat Financial Inclusion Limited (formerly known as SKS Microfinance Limited) BFIL is a non-banking finance company (NBFC), licensed by the Reserve Bank of India. It was founded in 1997 by Vikram Akula, who served as its executive chair until November 2011.[2] The company's mission is to provide financial services to the poor under the premise that providing financial services to poor borrowers helps to alleviate poverty.[3][4] In 2013, the company operated across 17 Indian states.[5]


On 28 July 2010, SKS Microfinance debuted on the Bombay Stock Exchange. Muhammad Yunus expressed concern that going public would put the demands of shareholders ahead of the poor.[6] He added further, "If they do it, I cannot stop them but I would encourage genuine Microcredit programs."[7] However, the differing legal frameworks in Bangladesh and India could justify SKS Microfinance's IPO initiative. Yunus's Grameen Bank in Bangladesh is funded primarily by deposits raised from its own borrowers and non-members, whereas Indian MFIs are prohibited by law from collecting deposits.[8]

SKS founder Vikram Akula resigned from the board on 23 November 2011. As of 2015, P. H. Ravi Kumar is the non-executive chairman. [9]

The Company has entered in to an agreement with IndusInd Bank regarding a potential merger via share swap.

MFI Crisis in India in 2011[edit]

SKS also suffered the Crisis the MFI industry went through in 2011. In 2012, an independent investigation commissioned by the company linked SKS employees to at least seven suicides of creditors in Andhra Pradesh. A second investigation said SKS may have been involved in two other suicide cases.[10] In 2012, SKS Microfinance cut 1200 jobs and closed 78 branches in Andhra Pradesh.[11] Interviews with family members of the deceased, by BBC suggested that the reason for these suicides appeared to be large sub-prime loans taken by the villagers, with the active encouragement of SKS loan agents.[12]


SKS Microfinance offers life assurance and a variety of financial loans – Income Generation Loans; Mid-Term Loans; Long Term Loans; Loans for purchase of products like cook-stoves, solar lights, water purifiers, mobile phones, bicycles and sewing machines; and loans secured on gold jewellery.[13] The company lists some of the social benefits of its financial product and service offerings as "providing self-employed women financial assistance to support their business enterprises, such as raising livestock, running local retail shops called kirana stores, providing tailoring and other assorted trade and services."[13]


SKS Microfinance follows the Joint Liability Group (JLG) model. The methodology involves lending to individual women, using five– member groups as the ultimate guarantor for each member.[14] Through group lending, situations of adverse selection and moral hazard due to asymmetric information are better managed.[15] "Social collateral" replaces asset collateral (which is lacking in the poorer segments of society). Such a system works because India is still a highly community-centric society. The concept of honour and respect within society is deeply rooted in Indian culture and willful default invites condescending glances, humiliation and even ostracism.[16] In Nov 2015,SKS Microfinance Ltd has cut interest rates by one percentage point to 19.75% on the loans it offers to low-income women borrowers, making it the sole Indian microlender to offer loans at a rate below 20%.The move came after Reserve Bank of India (RBI) decided to double the borrower limit for microfinance loans for less than 24 months.Lower interest rates can attract more borrowers in an increasingly competitive market. Microfinance companies, which had started lending at around 28-34% in 2010, are now able to charge lower interest rates because of newer avenues to raise funds at lower cost and their ability to operate more efficiently than before.“SKS is the first company to charge sub-20% interest rates on the core income generating loans,” the company claimed in a statement on Friday. This is the fourth time SKS has reduced interest rates since October 2014.[17]


  1. ^ SKS Earnings Update Q4FY15
  2. ^ "Vikram Akula quits SKS". The Hindu. Chennai, India. 23 November 2011. 
  3. ^ "SKS: Know SKS: Our Approach". Archived from the original on 2012-05-13. Retrieved 2012-07-17. 
  4. ^ The Microfinance Promise. Jonathan Murdoch, JSTOR
  5. ^ SKS Microfinance concludes two securitisation transactions Business Standard. April 1, 2013
  6. ^ "Archived copy". Archived from the original on 2015-06-23. Retrieved 2011-03-10.  ABCNews, SKS Launches India's First Microfinance IPO
  7. ^ "Archived copy". Archived from the original on 2011-08-29. Retrieved 2011-09-19.  Microfinance Focus, "Microfinance pioneer Prof Yunus raises concern over SKS IPO,"
  8. ^ "Archived copy". Archived from the original on 2011-09-26. Retrieved 2011-09-19.  Microfinance Focus, "Exclusive: SKS Microfinance journey to IPO – An inside story,"
  9. ^ Care Ratings - SKS Microfinance Limited. April 6, 2015
  10. ^ Kinetz, Erika. "AP IMPACT: Indian lender SKS' own probe links it to borrower suicides, despite company denials". Associated Press Business Writer. Associated Press/Yahoo. Retrieved 25 February 2012. 
  11. ^ "SKS Microfinance cut 1,200 jobs in Andhra Pradesh". The Times Of India. Retrieved 10 May 2012. 
  12. ^ Morris, Madeline. "'India's Microfinance Meltdown' for BBC Newsnight". You Tube. BBC. Retrieved 23 July 2015. 
  13. ^ a b "SKS: Our Work: What We Do: Our Products". Retrieved 7 February 2016. 
  14. ^ "SKS: Know SKS: Our Approach: Methodology". Archived from the original on 2012-05-13. Retrieved 2012-07-17. 
  15. ^ [1] Prabal Roy Chowdhury, "Group-lending with sequential financing, joint liability and social capital,"
  16. ^ Eric Savage, Abhijit Ray & Abhishek Fogla, "Indian Microfinance: Swimming Fully Clothed!," "Archived copy" (PDF). Archived from the original (PDF) on 2012-03-21. Retrieved 2011-09-19. 
  17. ^

External links[edit]